FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Problem 10-2

Seipp Company purchased a vehicle on January 1, 2018. During 2018, 2019 and 2020 they made various expenditures related to that vehicle. Determine which expenditures are revenue expenditures and which are capital expenditures.

 

Expenditure

1

Painting company advertising on vehicle

2

Oil change and tune up

3

Repair of punctured tire

4

Annual insurance premium

5

Annual registration sticker

6

Overhaul of engine

7

Addition of trailer-towing package

8

Gasoline

9

Application of rust prevention package

 

 

 

Problem 10-3

On January 1, 2017 Baker Company purchased a new delivery van for $84,000 that had an expected salvage value of $12,000. Its useful life was estimated to be 4 years or 160,000 miles.

Its actual mileage was

2017 37,800 miles

2018 43,600 miles

2019 39,100 miles

2020 39,500 miles

For Parts 1, 2, and 3, use the specified method to calculate the depreciation expense for each year from 2017 through 2020.In each part, also calculate the accumulated depreciation and book value for each year. Show and label all calculations.

Part 1: Straight-Line Method

Part 2: Double-Declining Balance Method

Part 3: Units-of-Production Method

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